Sony boss pledges turnaround exit by early next year

May 22, 2014 - 2:52:46 pm

TOKYO: Sony's chief executive pledged Thursday to drag the embattled electronics giant out of a painful restructuring in the current fiscal year and pointed to high-definition technology as a possible saviour for its money-losing TV unit.

Kazuo Hirai made the comments as he unveiled Sony's newest turnaround strategy, just a week after the Japanese company posted a $1.26 billion annual loss.

Much of that red ink stemmed from costs tied to Sony's exit from the personal computer business, part of a wider shakeup that has seen layoffs and asset sales -- including its Manhattan headquarters for more than $1.0 billion.

Sony shares plunged in the wake of the shock loss -- it has now lost money in five of the last six years -- and followed news that the sprawling firm would not pay bonuses to senior executives for the third straight year.

Hirai, appointed in 2012 to resuscitate the company, has centred much of his attention on shaking up a troubled consumer electronics business, including Sony's money-losing television unit.

Speaking to reporters in Tokyo, he said: "We will complete the structural reform of our electronics business (in the fiscal year to March 2015), in order to transition Sony to a high profitability structure and deliver sustained growth."

He added that strong sales of 2K and 4K high-resolution TVs, which tend to have better profit margins than lower-end models, could help turn around the fortunes of the company's struggling television unit.

"We expect there will be a strong product lineup in this fiscal year."

Hirai has repeatedly shrugged off pleas to abandon the television unit, which he insists remains central to Sony's core business.

The firm also rejected a call from a US hedge fund billionaire to spin off part of its profitable movie business, which includes a Hollywood studio.

TV losses narrowed in the past year to March as the management slashed costs, and Hirai said he expected it would post a profit this year.

"Despite the loss, we are on the right track -- the cost structure has become strong in the division," he added.

Sony is betting on rising demand for televisions with 4K technology -- the highest definition available that is several times sharper than current offerings.

The company is a leader in the next-generation technology which is currently found on large televisions from 50 inches and above, although a high price tag has so far been a barrier to big sales.

Japanese manufacturers have suffered badly in their TV divisions as razor-thin margins and fierce overseas competition in the lower end of the market dragged on their results.

The electronics that built Sony into a global brand in the 1980s are now an albatross around its neck, weighing on the profits that other arms of the huge company generate, such as those in music publishing and the movie division. Its little-known insurance business also makes money. (AFP)